The debate has gotten heated over the years, and even more so now with the release of Apple's iPad, which hackers were able to jailbreak into within days of its release. The 'fly in the ointment' with iPads is that if a ruling does come down in favor of the EFF and jailbreaking is deemed legal, this ruling would not apply to iPads, since only iPhones and iPod Touch were submitted with the original EFF exemption request.
Scare Tactic Posters:
Jay Freeman, founder of Cydia estimates 8.5% of all iPhones and iPods Touch are jailbroken--and given the possibilities with the iPad's crazy battery life and powerful processor, he sees some really impressive jailbreak apps in the future.
Much more on legality of jailbreaking from Ron Callari: Inventor Spot Writer